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December 18, 2018

[Mr. Xi’s speech, lasting nearly one and half hours, came at a pivotal, potentially fraught moment in the country, when all the contradictions in its governance appeared in stark relief. Mr. Xi’s political power is as great as that of any leader in decades, yet his party’s tightening of controls over the economy and ever more aspects of society suggest a deep-seated insecurity at the highest levels.]

By Chris Buckley and Steven Lee Myers

President
Xi Jinping of China, center, speaking on Tuesday at the Great Hall of the

People
in Beijing. Some investors had hoped for signals that Mr. Xi would take

further
steps to liberalize the economy or ease tensions with Washington.

Credit
Wu Hong/EPA, via Shutterstock

BEIJING — Facing deepening tensions abroad
and anxieties at home, China’s leader, Xi Jinping, delivered an unabashed
defense of his policies on Tuesday, using a key anniversary to argue that his
recipe of guided growth under strong Communist Party control must not waver.

Mr. Xi made his case to some 3,000 officials
and guests gathered in the imposing Great Hall of the People in Beijing to
commemorate 40 years since China embarked on far-reaching economic changes
after decades of upheaval and malaise under Mao Zedong.

The resonant date had inspired expectations
among some analysts and investors that Mr. Xi would give clearer priorities to
counter economic headwinds and trade tensions that have flared with the United
States. But he offered none, referring only obliquely to the economic and
diplomatic challenges confronting China.

Instead, he used the meeting, broadcast live
on Chinese television, to stress that only the party’s dominance would allow
China to continue its stunning transformation into the decades ahead. The first
lesson from 40 years of reform, he said, was the need to maintain party
leadership “over all tasks.”

“It was precisely because we’ve adhered to
the centralized and united leadership of the party that we were able to achieve
this great historic transition,” Mr. Xi said.

Mr. Xi’s speech, lasting nearly one and half
hours, came at a pivotal, potentially fraught moment in the country, when all
the contradictions in its governance appeared in stark relief. Mr. Xi’s
political power is as great as that of any leader in decades, yet his party’s
tightening of controls over the economy and ever more aspects of society
suggest a deep-seated insecurity at the highest levels.

Mr. Xi’s government has been forced to make
some compromises with the United States as President Trump’s trade demands have
escalated. But Beijing has also intensified corporate espionage and reacted
with unbridled fury when American prosecutors sought to extradite an executive
of Huawei, the Chinese telecommunications giant, who was recently arrested in
Canada. China quickly arrested two Canadians, apparently in retaliation.

Mr. Xi said that a country of China’s size
and influence was right to hold “lofty aspirations.”

“China will never develop itself by
sacrificing the interests of other countries,” Mr. Xi said, but he added that
China also would not “abandon its own legitimate rights and interests.”

Throughout his speech, Mr. Xi performed
similar rhetorical swerves, promising both greater openness and assertiveness,
both strong state companies and prospering private businesses.

The government’s intensifying repression of
Muslims in Xinjiang, crackdown on Christians and secretive detention of the
Chinese chief of Interpol have clouded its global standing at a time when it
aspires to play a larger international role.

Mr. Xi’s speech risked leaving Chinese
officials no clearer about his policy agenda at a time when relations with the
United States in particular have deteriorated badly.

“When everything is a priority, nothing is a
priority,” Yuen Yuen Ang, a professor of political science at the University of
Michigan, Ann Arbor, who studies China, said by email after watching the
speech. “Today, many policy goals in China are in tension with one another.
Which ones take precedence? This is what officials will need to know to carry
out their work on a practical level.”

Even as Mr. Xi spoke, stock markets dropped
in Asia. Though such speeches are not China’s usual vehicle for announcing
specific policy measures, some investors had been hoping for signals that
Beijing would take further steps to liberalize the economy or ease tensions
with Washington.

Mr. Xi and Mr. Trump agreed early this month
to call a truce in disputes over trade and investment, and to allow 90 days to
reach an agreement.

But Mr. Xi’s speech on Tuesday was likely to
dampen hopes of a breakthrough, said Ryan L. Hass, a former director for China
at the National Security Council who is now a fellow at the Brookings
Institution.

Mr. Hass said his Chinese contacts had
“described the speech as the place where Xi would send a signal to Trump on his
own terms about the market openings and other reforms on the horizon.”

“If those messages were embedded in the
speech,” he added, “they appear to have been well concealed.”

Mr. Xi warned that the future contained “all
kinds of risks and challenges,” but he said repeatedly that the party had
expertly guided the country thus far and must continue to do so. He emphasized
twice that the party had been “completely correct” in its embrace of economic
overhauls, a remark that brushed over the many internal debates, as well as ups
and downs, that accompanied those changes.

Mr. Xi called for revitalizing
Marxist-Leninist doctrine, a reflection of the party’s fears that it could lose
its grip over a younger, increasingly wired and well-traveled generation. “Let
contemporary Chinese Marxism shine even more brilliant rays of truth,” he said.

According to Julian B. Gewirtz, a scholar at
the Weatherhead Center for International Affairs at Harvard, who watched the
speech while visiting Beijing, “This was a speech about the party more than
anything else.”

It remains to be seen whether Mr. Xi’s
remarks will reassure Chinese private companies, as he has tried in recent
weeks to do. Business leaders and economists have complained about meddlesome
officials, heavy and capricious tax burdens, restrictions on investment and
banks that prefer to channel loans to big state companies that enjoy the
patronage of party leaders. They have welcomed Mr. Xi’s promises, but also
warned that the economy remains troubled by risks.

“It was precisely because we’ve adhered to the
centralized and united leadership of the party that we were able to achieve
this great historic transition,” Mr. Xi said.

Mr. Xi’s speech, lasting nearly one and half
hours, came at a pivotal, potentially fraught moment in the country, when all
the contradictions in its governance appeared in stark relief. Mr. Xi’s
political power is as great as that of any leader in decades, yet his party’s
tightening of controls over the economy and ever more aspects of society
suggest a deep-seated insecurity at the highest levels.

Mr. Xi’s government has been forced to make
some compromises with the United States as President Trump’s trade demands have
escalated. But Beijing has also intensified corporate espionage and reacted
with unbridled fury when American prosecutors sought to extradite an executive
of Huawei, the Chinese telecommunications giant, who was recently arrested in
Canada. China quickly arrested two Canadians, apparently in retaliation.

Mr. Xi said that a country of China’s size
and influence was right to hold “lofty aspirations.”

“China will never develop itself by
sacrificing the interests of other countries,” Mr. Xi said, but he added that
China also would not “abandon its own legitimate rights and interests.”

Throughout his speech, Mr. Xi performed
similar rhetorical swerves, promising both greater openness and assertiveness,
both strong state companies and prospering private businesses.

The government’s intensifying repression of
Muslims in Xinjiang, crackdown on Christians and secretive detention of the
Chinese chief of Interpol have clouded its global standing at a time when it
aspires to play a larger international role.

Mr. Xi’s speech risked leaving Chinese
officials no clearer about his policy agenda at a time when relations with the
United States in particular have deteriorated badly.

“Of all the anniversaries related to the
reforms — 20 years, 25 years, 35 years — this 40th anniversary is perhaps the
least optimistic I have seen,” said Ding Xueliang, a professor emeritus at the
Hong Kong University of Science and Technology who has long studied China’s
reforms.

“People in very senior positions also have no
clear idea of the direction,” he added. “Not a single person in the past half
year who I talked with in China, not a single person, said he or she is clear
about the next stage.”

Adding to the anxiety were signs that the
government was tightening the release of local economic data amid a sharp
slowdown. Last month, the southern province of Guangdong stopped releasing the
results of a monthly purchasing managers’ index — a survey that takes the
temperature of China’s important factory sector — citing a notice from the
National Bureau of Statistics. The bureau said on Tuesday that the province had
violated regulations on statistics gathering.

In his speech, Mr. Xi repeatedly touted the
huge advances China has made since “reform and opening” began in 1978, rattling
off detailed statistics on personal incomes, education and life expectancy.
Gone are the days when food and clothing were rationed, he said.

“Hunger, food shortages and poverty, which
plagued the Chinese people for thousands of years, have been generally left
behind,” he said.

Mr. Xi paid tribute to Deng Xiaoping, the
former leader who presided over the reforms in the 1980s. In past anniversaries
of the reform era, Deng stood out in tributes and displays, but Mr. Xi has
shifted the spotlight to his own achievements since he became party leader in
2012.

Mr. Xi has repeatedly promised to ensure that
China offers businesses and foreign investors an open, fair market, but many
have become skeptical that he will follow through. Instead, many say, Mr. Xi’s
drive to extend party control, stifle public debate and defend the state sector
have stymied economic liberalization.

“Pledges to reform are sincere, but
simultaneous pledges to prevent all instability too often nullify progress,”
said Daniel H. Rosen, a founding partner of Rhodium Group, an economic analysis
firm that helps keep a running scorecard on China’s promised changes. “Reform
necessarily means some instability, and trying to have it both ways will not
work.”

The occasion of the speech on Tuesday was the
anniversary of a party meeting in 1978, when Deng and other veteran leaders who
had fallen during Mao’s Cultural Revolution began to reassert their power and
lay out ideas for restoring the economy after decades of strife.

The meeting now features in the party’s
heavily mythologized history of that time as a watershed, although it was only
years afterward that “reform and opening up” became an official party formula.

Before Mr. Xi’s speech, Chinese economists
who favor market reforms had openly voiced frustration with what they said was
the slow, muddled pace of change. They appear likely to be disappointed, and
even worried.

“We’re sincerely hoping that this big meeting
will be able to sound a clarion call for deepening reform,” Xiang Songzuo, a
senior economist at Renmin University in Beijing, said at a forum in Shanghai
over the weekend.

He cited an estimate from researchers at an
unidentified official institute who concluded that China’s real rate of
economic growth this year could be just 1.67 percent, or even lower. That
projection is at the very low end of economists’ estimates, but Chinese growth
is widely believed to be lower than official estimates, which forecast an
expansion of 6.5 percent this year.

If there was no strongly reformist call from
leaders, Professor Xiang said, “My final conclusion will be that China’s
economy is headed for a plight that will last for a considerable time and be
very, very difficult.” He did not respond to emails or messages after Mr. Xi’s
speech.